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State House: Legislators are wary of paying small power producers because it would raise electric bills.

By TUX TURKEL, Staff Writer April 27, 2009

Maine's renewable energy advocates are envious of Germany.

They see a country that has less overall sunshine than Maine, but is a world leader in the number of solar-electric panels installed. A big reason, they say, is an 18-year-old German law that requires utilities to pay homeowners and other small producers above-market rates for power from their rooftop systems. The arrangement is called a feed-in tariff.

Now a bill in the Legislature would make Maine the first state in the U.S. to have utilities pay premiums, through long-term contracts, to small producers using solar, wind, hydro and other green energy sources. Supporters say it would create thousands of jobs and help wean Maine from its dependence on imported fuel.

Sounds good, but who would pay the cost of these above-market rates?

If you get an electric bill, you would. Ratepayers would absorb the added expense, calculated to provide certain annual rates of return for small generators.

A feed-in tariff would raise electric bills for people who can least afford it, opponents say. And it would repeat a costly policy experiment from the 1980s, in which Maine ratepayers subsidized long-term contracts for renewable energy, only to see market rates fall when petroleum prices collapsed.

The two sides presented testimony at a public hearing earlier this month. On Tuesday, the legislative committee that oversees energy issues is set to work on the bill before it makes a recommendation to the full Legislature.

German solar envy aside, the bill has almost no chance of passing in its current form. Even key supporters on the committee have begun looking for a less-costly compromise, perhaps a small-scale pilot program.

But in a state with high energy bills and a heavy reliance on imported oil, lawmakers will wrestle with a familiar dilemma: how to make Maine more energy-independent, without increasing the burden on ratepayers and taxpayers.

Maine has long had a net-metering law, in which customers that produce excess renewable power get a credit on their bills. The provision was used by 360 Central Maine Power Co. customers last year, up from 224 in 2007. Federal and state tax programs that offset the cost of solar and other equipment also encourage green power.

But these incentives fall short, in the view of the Midcoast Green Collaborative, a group of Damariscotta-area businesses and residents promoting renewable energy as a vehicle for economic growth. They helped draft the feed-in tariff bill, modeled after European efforts. The tariff has created hundreds of thousands of jobs in Germany, they say, while adding only a couple of dollars a month to electric rates.

The Maine bill covers generators producing less than 20 megawatts. It includes solar, wind, hydroelectric, methane, biomass and tidal power. Contracts for this power would last at least 20 years, with rates set by the Maine Public Utilities Commission. Those rates would provide revenue for several purposes, such as paying operating expenses, but also to produce a minimum rate of return.

Feed-in tariffs exist in several countries. But if foreign laws seem less relevant to Maine, lawmakers can look closer to home, at Gainesville, Fla.

Since the Maine bill was drafted, Gainesville became the first American city to enact feed-in tariffs. The regional utility pays participants 32 cents per kilowatt hour for the first two years of the 20-year program, roughly three times the basic home rate.

"With that tariff, I could easily double the size of my company in a year or two," said Phil Coupe, co-owner of Portland-based solar installer ReVision Energy.

Coupe, who has 30 employees, gets calls from people who want solar electricity. But a typical home-sized system costs more than $15,000, before current tax incentives. That's out of the reach of many residents. A German-style tariff would offset the cost, he said, and create...